Totally understandable!!! The government has made it so difficult to get any finance through on an investment.
My thoughts are this!!! Don’t let the difficulty of finance cloud the benefits it provides, it’s all about return on investment. Paying cash you get the pleasure of paying MORE tax… not something I recommend. I prefer to see an appropriate amount of leverage so it will maximise your return.
So the question of a mortgage or not is more about leverage or loan to value than risk and tax you are prepared to pay than the cash you have...
Hey, guys. Property Search,,, Think Gladfish. I'm Brett Alegre-Wood and this is Property Rant.
So today basically I don't want to take a mortgage. A great question here. I don't want to take a mortgage. More and more people, because of all the changes and because of the difficulty of the process and you know it's almost like you have to remember stuff back to when you were a kid to apply for a mortgage these days. And if you get it wrong, that's it, gone. It's so difficult, they've made the process. It's ridiculous.
Unfortunately, there's nothing any individual can do about it. Until the government wakes up to themselves and stops being frigging monkeys and idiots because that's what they are right now, it's absolutely ridiculous what they're doing and I don't agree with it whatever. But anyway, that's my rant. Look, anyway, the things to consider whether you should take a mortgage or not.
If you don't take a mortgage, you for it with cash, fantastic. What it's going to mean is if this is the rent and these are the costs, that's the profit, and therefore that is what you'll pay tax on. Now my alternative option, I would rather go, "You know what? I'll take a mortgage on that, I'll use the money that I would have paid cash for that to buy another investment, so now we've got two investments so I've diversified if you like. Then what I'll do is I'll potentially buy one in one area, one in another so when that area is going up, that area might not be, and vice versa.
So that's a good portfolio strategy but also what it means is that money that I was wasting in tax and giving to those frigging monkeys that are just going to waste it on ridiculous unproductive things, it's not getting used, it's going back into our portfolio. Now, the question with that is then what's the leverage or the amount of leverage, the amount of loan-to-value I should be getting. And of course, if you're looking to pay cash, well don't go to a high.
I would recommend 60%, if you want to be really, really conservative 50%. Because at 50%, you're really going to be covered for a long period of time and you're really going to... Now, if you're playing purely for income, fine. No problems, we can do that. But there are other ways that we can do, still take a mortgage, still get a high yield, and work that out.
So speak to the team about those opportunities that you can because it's... So it's not just a case of saying "Right, I want cash because I'm going to make this much money each month. You have got to then take the tax off and then you see what's left and you think "Well, actually, you know what? That versus if I did two and made this much, I'm going to end up with about the same amount of money in my pocket but I now have double the asset potentially which over... If the market rose 10%, that's 10% increase on the doubled amount.
So your return on investment, which should be why we're doing this whole thing, is going to be higher. So there's just some consideration, some basic consideration. Can you do cash? Yes, you can. We have lots of clients doing cash and in fact more and more international investors are doing cash now because they simply can't get mortgages. I mean, it's ridiculous the state of things now and the way things are going with the way mortgages are. And that's not just in the UK, that's all around. Things have tightened up which, in some ways that's a good thing because what it's done is tightened up where's the market's sort of hitting a peak so what you might find is there's not going to be this drop, it'll be a nice, even... A bit like this. And then back up again. Great, that's good for that cycle. But I think the way they're going about it is absolutely ridiculous because it's targeting some and not others.
Corporations are almost getting away scot-free whereas individuals aren't and that, for me, that's not how it should be. Individuals should be getting supported. Corporations should be the ones that should be getting penalized on this.
But anyway, that's another discussion, another rant. But guys, yeah, so cash, absolutely possible but just consider those few things.
Okay, guys. Have a great day. Live with passion.